Date: July 15, 2024

Category: Blogs,Mortgage Tips & Advice

Part 3- What are other Canadians deciding at renewal time? 🤔

Why are they choosing these options? 🏡

To continue with this month’s topic, let’s review: taking an out-of-the-box approach that will allow them to pay off the current mortgage faster 💨

This is a very unique approach and will not apply to all borrowers. First, let’s review who this product is right for:
– 💪 Someone who wants to pay the mortgage off quickly
– 📈 Someone who is good with a budget and can stick to it
– 💰 Someone who is already putting money aside each week/month into savings
– 👀 Someone who can overlook interest rates and focus on the solution

What is the solution? 🤔

If you have not heard of the Manulife One mortgage, let me shed some light 🔦. This product is somewhat ‘like’ a traditional line of credit; however, it is based on daily interest (this is good 👍).

It is an all-in-one account, meaning your income goes in, your bills and your mortgage all come out of the same account. One account that holds everything. 🏦

So before you call me crazy 🤪, let’s review a scenario together to make this make sense.

We are going to compare a $400,000 mortgage at 4.5% five-year fixed, 30-year amortization, and the same mortgage amount inside of a Manulife One.
You will be shocked 😲. Here are the parameters:

Traditional mortgage 🏠
– $400,000 mortgage balance
– 4.5% interest rate, five-year fixed
– $2,017 monthly payment (this is based on a 30-year amortization)

At this point, we are only comparing apples to apples 🍏🍎, so we will not incorporate the savings you have in your account. We just want mortgage to mortgage.

We are going to assume you have a monthly net household income of $8,000, and not including mortgage payments, you spend $2,500 per month on life/household expenses. 🏡💵

The math works because in this example, you are bringing in $8,000 and spending $2,500 per month. This means that $5,500 stays in the Manulife One account, and this will all go towards the mortgage payment. 💸

Now instead of paying $2,017 per month, you are paying $5,500 towards your mortgage each month (remember, you need a budget 📊)… this is money you would have had left over if you use a budget and stick to it. 💪

The major difference:
Traditional mortgage above will take you 30 years to pay off and it will cost you more than $326,000 in interest. 😱
Manulife One  will take about 8 years to pay off and cost you approximately $124,000 in interest. 🤩

Using this method, you have saved over $202,000 in interest and shaved 22 years off your mortgage. 🎉

Yes, you will need some discipline, but the numbers don’t lie. You will be mortgage-free faster. 🏁

You will notice that I didn’t mention interest rate at all…that’s for a future discussion.

If you want to learn more about the Manulife One and how a few years of budgeting can get you mortgage-free quicker, then let’s chat. 📞💬

Stay tuned for next week’s DYK as we review:
Switching lenders to find a lower rate (not necessarily a lower payment) 🔄💡

Click here to book a time to connect and review your questions.

Talk soon,

Ana

Mortgages can be complicated; we are here to help you make “cents” of it.

We focus on Mortgage Solutions, Period!

To learn more connect with Ana Cruz 905.870.0513 or email at ana@askanacruz.ca